The National Bank of Georgia (NBG) raised its key refinancing rate by one percentage point to 7% on September 23, citing “significant increase in the inflation expectations” amid depreciation of the national currency lari.

Georgia’s annual inflation accelerated to its highest rate in four years at 5.4% in August, exceeding central bank’s target level of 5%.

NBG’s monetary policy committee said after its meeting on September 23, that it expects annual inflation to go down at the targeted level by the end of 2016.

The government said earlier on September 23 that the 2016 state budget will set inflation forecast at 4.5% next year, which, it said, would be within central bank’s target level.

The central bank started tightening monetary policy earlier this year, increasing refinancing rate from 4% to 4.5% in February and further raising it to 5% in May, to 5.5% in July, and to 6% in August. Last time when key refinancing rate was at 7% was in November, 2011.

Central bank’s monetary policy committee will hold its next meeting on November 4.